UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K/A (AMENDMENT NO. 1) (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 0F 1934 FOR THE YEAR ENDED DECEMBER 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT 0F 1934 For the transition period from _____________ to ___________ COMMISSION FILE NUMBER 1-9718 PNC BANK CORP. (Exact name of registrant as specified in its charter) PENNSYLVANIA 25-1435979 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) ONE PNC PLAZA 249 FIFTH AVENUE PITTSBURGH, PENNSYLVANIA 15222-2707 (Address of principal executive offices) (Zip Code) (412) 762-1553 (Registrant's telephone number, including area code) (Former name or former address, if changed since last report) By filing this amendment ("Amendment No. 1"), the undersigned registrant hereby amends its Annual Report on Form 10-K for the year ended December 31, 1996 ("1996 Form 10-K"), to include, as permitted by Rule 15d-21 under the Securities Exchange Act of 1934, as amended ("Exchange Act"), the financial statements and exhibits required by Form 11-K with respect to the PNC Bank Corp. Incentive Savings Plan, as amended ("PNC Plan") and the Midlantic Savings and Investment Plan, as amended ("Midlantic Plan"). Effective January 1, 1997 the Midlantic Plan merged with and into the PNC Plan. In accordance with Rule 12b-15 of the Exchange Act, Item 14 of Part IV of the 1996 Form 10-K is hereby amended and restated to read in its entirety as follows: PART IV ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K The following report of independent auditors of the Corporation and consolidated financial statements, included in the Annual Report to Shareholders at the page indicated, are incorporated herein by reference.
PAGE OF FINANCIAL STATEMENTS ANNUAL REPORT --------------------------------------------------------------------------------------------------------------- Report of Ernst & Young LLP, Independent Auditors 47 Consolidated Statement of Income for the three years ended December 31, 1996 48 Consolidated Balance Sheet as of December 31, 1996 and 1995 49 Consolidated Statement of Changes in Shareholders' Equity for the three years ended December 31, 1996 50 Consolidated Statement of Cash Flows for the three years ended December 31, 1996 51 Notes to Consolidated Financial Statements 52-68 Quarterly Selected Financial Data 70
As permitted by Rule 15d-21 of the Exchange Act, the following financial statements of the PNC Plan and Midlantic Plan and reports of independent auditors thereon are filed with Amendment No. 1 at the page indicated.
PAGE OF AMENDMENT NO. 1 -------------------------------- FINANCIAL STATEMENTS PNC PLAN MIDLANTIC PLAN --------------------------------------------------------------------------------------------------------------- Report of Independent Auditors 5 26 Statements of Net Assets Available for Plan Benefits 6 27 Statements of Changes in Net Assets Available for Plan Benefits 7 28 Notes to Financial Statements 8 29 Schedule of Assets Held for Investment 18 38 Schedule of Reportable Transactions 24 39
FINANCIAL STATEMENT SCHEDULES ---------------------------------------------------------------------- Not applicable. REPORTS ON FORM 8-K ---------------------------------------------------------------------- The following reports on Form 8-K were filed during the quarter ended December 31, 1996, or thereafter: Form 8-K dated as of October 7, 1996, reporting a public offering of 6,000,000 shares by the Corporation of a newly authorized series of Preferred Stock, filed pursuant to Item 5. Form 8-K dated as of October 10, 1996, reporting the Corporation's consolidated financial results for the three and nine months ended September 30, 1996, filed pursuant to Item 5. 2 Form 8-K dated as of January 15, 1997, reporting the Corporation's consolidated financial results for the three months and year ended December 31, 1996, filed pursuant to Item 5. EXHIBITS ------------------------------------------------------------------- The exhibits listed on the Exhibit Index on pages 41 and 42 of this Form 10-K/A are filed herewith or are incorporated herein by reference. 3 PNC Bank Corp. Incentive Savings Plan Audited Financial Statements Years ended December 31, 1996 and 1995 CONTENTS Report of Independent Auditors ...................................... 5 Audited Financial Statements Statements of Net Assets Available for Plan Benefits................. 6 Statements of Changes in Net Assets Available for Plan .............. 7 Notes to Financial Statements ....................................... 8 Schedules Schedule of Assets Held for Investment .............................. 18 Schedule of Reportable Transactions ................................. 24 4 REPORT OF INDEPENDENT AUDITORS Administrative Committee PNC Bank Corp. Incentive Savings Plan We have audited the accompanying statements of net assets available for plan benefits of the PNC Bank Corp. Incentive Savings Plan (Plan) as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for plan benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment as of December 31, 1996, and reportable transactions for the year ended December 31, 1996, are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. June 25, 1997 5 PNC Bank Corp. Incentive Savings Plan Statements of Net Assets Available for Plan Benefits
DECEMBER 31 1996 1995 ------------------------------------- ASSETS Investments at fair value: PNC Bank Corp. common stock (1996 cost--$248,214,481; 1995 cost--$258,667,697) $462,310,868 $411,707,599 PNC Bank Corp. preferred stock (1996 cost--$7,080; 1995 cost--$8,247) 42,607 42,224 Short-term investment funds (1996 cost--$65,444,777; 1995 cost--$67,302,448) 65,444,777 67,302,448 Registered investment companies (1996 cost-- $185,152,570; 1995 cost--$147,451,321) 201,377,398 161,214,839 Participant loans, at current outstanding principal balance 27,423,234 22,417,465 Other (1996 cost--$355,177) 329,144 - ------------------------------------- Total investments 756,928,028 662,684,575 Contribution receivable 1,669,984 1,137,814 Accrued income 321,061 342,424 Other accruals 1,023,084 3,341,963 ------------------------------------- Total assets 759,942,157 667,506,776 LIABILITIES ESOP note payable to PNC Bank Corp. 67,700,000 84,600,000 Accrued interest payable 2,139,443 2,474,860 ------------------------------------- Net assets available for plan benefits $690,102,714 $580,431,916 =====================================
See accompanying notes. 6 PNC Bank Corp. Incentive Savings Plan Statements of Changes in Net Assets Available for Plan Benefits
YEAR ENDED DECEMBER 31 Additions: 1996 1995 ---------------------------------------- Investment income: Interest $ 5,177,885 $ 6,521,484 Dividends: PNC Bank Corp. 17,926,106 18,717,784 Other 17,173,609 9,700,904 ---------------------------------------- 40,277,600 34,940,172 Contributions (employer): Cash 12,298,198 9,461,406 PNC Bank Corp. Common Stock - 5,081,098 Contributions (employee) 28,243,234 26,821,384 ---------------------------------------- Total additions 80,819,032 76,304,060 Deductions: Payments to participants or beneficiaries 50,052,313 51,796,135 ESOP note interest expense 4,309,434 4,949,720 ---------------------------------------- Total deductions 54,361,747 56,745,855 Net realized and unrealized appreciation in fair value of investments 75,699,053 160,333,717 Net assets received in mergers/divestitures 7,514,460 12,305,278 ---------------------------------------- Net increase 109,670,798 192,197,200 Net assets available for plan benefits at beginning of year 580,431,916 388,234,716 ---------------------------------------- Net assets available for plan benefits at end of year $690,102,714 $580,431,916 ========================================
See accompanying notes. 7 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements December 31, 1996 1. SIGNIFICANT ACCOUNTING POLICIES VALUATION Marketable securities are stated at fair value. Securities are valued at the last public sale price of the securities listed on the New York Stock Exchange. If no sales were reported, and in the case of securities traded over the counter, the last bid price at the close of business is used. The value of any security not listed or quoted on any exchange is determined by the last closing bid price, reference to the bid price of any published quotations in common use, or by the quotation of a reputable broker. For certain investments that do not have an established fair value, such value is established based on the opinion of the trustee. The fair value of the participation units in the short-term investment funds and registered investment companies are based on quoted redemption values on the last business day of the plan year. Loans are valued at the amount of principal outstanding. The Plan's assets are concentrated in the stock and bond markets. Realization of the respective values shown on the Statements of Net Assets Available for Plan Benefits is subject to the results of these markets. The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from such estimates and such differences may be material to the financial statements. 2. DESCRIPTION OF THE PLAN PNC Bank Corp. (PNC Bank) is the sponsor of the Incentive Savings Plan ("PNC Plan"). The Plan covers substantially all eligible salaried employees of PNC Bank and certain subsidiaries. 8 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) The PNC Plan allows participants to contribute from 1 to 15 percent of their biweekly base compensation on a pretax 401(k) basis. PNC Bank matches 100 percent of employee contributions up to 6 percent of base compensation, subject to Internal Revenue Service (IRS) limitations. Participants are fully vested in their balances, including the employer contributions. PNC Plan income is allocated to participants based on an average participant investment balance on a quarterly basis. Participants in the PNC Plan may invest any voluntary contributions and balances rolled over from any prior plans in any of four investment options: Fund A (an equity fund), Fund B (an intermediate-term income fund), Fund C (a short-term fixed income fund), and Fund D (PNC Bank Corp. common stock fund). At December 31, total participants in each fund were as follows:
1996 1995 ----------------------- Fund A 10,118 10,433 Fund B 7,668 8,610 Fund C 8,483 9,654 Fund D 14,279 15,597
Employer matching contributions for participants whose age is 55 years or under are made in PNC Bank Common Stock. Participants over age 55 can choose to have their matching contribution made in PNC Bank Corp. Common Stock or in cash to invest in the other three funds. Benefits to participants for withdrawals requested but yet to be paid were $17,096,542 and $9,821,077 at December 31, 1996 and 1995, respectively. The PNC Plan has a loan feature that allows participants to borrow against their balance in accordance with the loan policies established by the Administrative Committee. Such borrowings are reflected in the Loan Fund. At December 31, 1996, the PNC Plan was committed to fund approximately $3.7 million in participant loans, of which approximately $1.5 million represents existing loan refinances. Under certain circumstances, the PNC Plan permits withdrawals by participants. Although it has not expressed an interest to do so, PNC Bank has the right under the PNC Plan to discontinue contributions at any time and to terminate the PNC Plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). 9 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 2. DESCRIPTION OF THE PLAN (CONTINUED) The PNC Plan includes a leveraged employee stock ownership plan (ESOP). In September 1989, the ESOP borrowed $140 million from PNC Bank and purchased approximately 7,350,000 shares of PNC Bank Common Stock through open market purchases. The unallocated shares of PNC Bank Common Stock are pledged as security on the ESOP note. The ESOP shares are used to match a portion of PNC Bank's matching contributions to the PNC Plan. PNC Bank is obligated to make annual contributions sufficient to fund principal and interest payments on the ESOP note net of investment income and realized gains and losses in the unallocated ESOP fund. Shares of PNC Bank Common Stock allocated to participants totaled 640,782 in 1996 and 743,277 in 1995. The effective interest rate on the ESOP fixed rate notes was 5.13% in 1996. Principal payments are due on an annual basis and interest payments are due on a semiannual basis. The following is a schedule of debt maturities: 1997 $20,100,000 1998 23,900,000 1999 23,700,000 ----------- $67,700,000 =========== At December 31, 1996, the ESOP held 3,184,324 unallocated shares of PNC Bank Common Stock with a market value of $119,810,191 and $2,160,954 in short-term investment funds. These assets will be used to match future participant contributions. 3. INVESTMENTS The PNC Plan is comprised of investment funds representing both the employer's and the participants' contributions. Records are maintained to account for the noncontributory and the voluntary portion of each fund. 10 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) Net realized and unrealized appreciation in aggregate fair value of securities was as follows:
NET REALIZED AND UNREALIZED APPRECIATION IN FAIR VALUE FOR THE YEAR ENDED DECEMBER 31 1996 1995 ------------------------------------- PNC Bank Corp. common stock $66,279,669 $139,580,381 PNC Bank Corp. preferred stock 8,729 12,586 Registered investment companies 9,410,655 20,740,750 ------------ ------------ $75,699,053 $160,333,717 ============ ============
The fair values of individual investments that represent 5 percent or more of the PNC Plan's net assets are as follows:
DECEMBER 31 1996 1995 -------------------------------------- PNC Bank Corp. common stock $462,310,868 $411,707,599 PNC Money Market Portfolio 65,444,777 67,302,448 PNC Managed Income Fund - 31,003,125 PNC Core Equity Portfolio Fund - 29,285,309
11 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The net assets available for plan benefits for PNC Plan's investment funds were as follows:
INTERMEDIATE- TERM FIXED SHORT-TERM PNC BANK EQUITY INCOME-- FIXED INCOME CORP. STOCK FUND A FUND B --FUND C --FUND D --------------------------------------------------------------- December 31, 1996 - ----------------- Investments at fair value: PNC Bank common stock $ - $ - $ - $214,097,952 PNC Bank preferred stock - - - 42,607 Short-term investments Compass Capital Funds: Money Market Portfolio 3,608,542 1,269,510 55,791,123 1,270,280 Registered investment companies PNC Funds: Small Cap Growth Equity Portfolio 5,915,193 - - - International Equity Portfolio 30,722,695 - - - Small Cap Value Equity Portfolio 5,851,453 - - - International Emerging Markets Portfolio 7,252,467 - - - Growth Equity Portfolio 28,051,743 - - - Mid Cap Growth Equity Portfolio 8,734,800 - - - Mid Cap Value Equity Portfolio 8,700,000 - - - Intermediate Term Bond Portfolio - 20,412,876 - - Managed Income Portfolio - 32,755,855 - - Core Equity Portfolio 28,136,804 - - - Value Equity Portfolio 24,843,512 - - - Participant loans - - - - Other - 329,144 - - --------------------------------------------------------------- Total investments 151,817,209 54,767,385 55,791,123 215,410,839 Contribution receivable - - - - Accrued income 14,716 9,334 246,281 4,858 Due to (from) fund/other assets (liabilities) 4,264,879 640,824 4,432,342 2,939,006 --------------------------------------------------------------- Total assets 156,096,804 55,417,543 60,469,746 218,354,703 ESOP note payable - - - - Accrued interest payable - - - - --------------------------------------------------------------- Net assets available for plan benefits $156,096,804 $55,417,543 $60,469,746 $218,354,703 ===============================================================
PNC PNC BANK CORP. BANK CORP. ALLOCATED UNALLOCATED LOAN ESOP FUND ESOP FUND FUND TOTAL --------------------------------------------------------------- December 31, 1996 - ----------------- Investments at fair value: PNC Bank common stock $128,402,725 $119,810,191 $ - $462,310,868 PNC Bank preferred stock - - - 42,607 Short-term investments Compass Capital Funds: Money Market Portfolio 1,082,118 2,160,954 262,250 65,444,777 Registered investment companies PNC Funds: Small Cap Growth Equity Portfolio - - - 5,915,193 International Equity Portfolio - - - 30,722,695 Small Cap Value Equity Portfolio - - - 5,851,453 International Emerging Markets Portfolio - - - 7,252,467 Growth Equity Portfolio - - - 28,051,743 Mid Cap Growth Equity Portfolio - - - 8,734,800 Mid Cap Value Equity Portfolio - - - 8,700,000 Intermediate Term Bond Portfolio - - - 20,412,876 Managed Income Portfolio - - - 32,755,855 Core Equity Portfolio - - - 28,136,804 Value Equity Portfolio - - - 24,843,512 Participant loans - - 27,423,234 27,423,234 Other - - - 329,144 --------------------------------------------------------------- Total investments 129,484,843 121,971,145 27,685,484 756,928,028 Contribution receivable 1,669,984 - - 1,669,984 Accrued income 28,843 15,812 1,217 321,061 Due to (from) fund/other assets (liabilities) 435,601 (7,710,115) (3,979,453) 1,023,084 --------------------------------------------------------------- Total assets 131,619,271 114,276,842 23,707,248 759,942,157 ESOP note payable - (67,700,000) - (67,700,000) Accrued interest payable - (2,139,443) - (2,139,443) --------------------------------------------------------------- Net assets available for plan benefits $131,619,271 $ 44,437,399 $23,707,248 $690,102,714 ===============================================================
12 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The net assets available for plan benefits for PNC Plan's investment funds were as follows:
INTERMEDIATE- TERM FIXED SHORT-TERM PNC BANK EQUITY INCOME-- FIXED INCOME CORP. STOCK FUND A FUND B --FUND C --FUND D --------------------------------------------------------------- December 31, 1995 - ----------------- Investments at fair value: PNC Bank common stock $ - $ - $ - $194,709,309 PNC Bank preferred stock - - - 42,224 Short-term investments PNC Funds: Money Market Portfolio 4,015,003 1,625,480 55,358,999 - Registered investment companies PNC Funds: Small Cap Growth Equity Portfolio 7,672,930 - - - International Equity Portfolio 22,319,064 - - - Small Cap Value Equity Portfolio 6,810,828 - - - International Emerging Markets Portfolio 4,185,333 - - - Growth Equity Portfolio 17,151,237 - - - Intermediate Term Bond Portfolio - 18,139,072 - - Managed Income Portfolio - 31,003,125 - - Core Equity Portfolio 29,285,309 - - - Value Equity Portfolio 24,647,941 - - - Participant loans - - - - --------------------------------------------------------------- Total investments 116,087,645 50,767,677 55,358,999 194,751,533 Contribution receivable - - - 1,137,814 Accrued income 15,671 6,081 261,423 9,757 Due to (from) fund/other assets (liabilities) 1,662,421 (208,921) 846,119 533,718 --------------------------------------------------------------- Total assets 117,765,737 50,564,837 56,466,541 196,432,822 ESOP note payable - - - - Accrued interest payable - - - - --------------------------------------------------------------- Net assets available for plan benefits $117,765,737 $50,564,837 $56,466,541 $196,432,822 ===============================================================
PNC PNC BANK CORP. BANK CORP. ALLOCATED UNALLOCATED LOAN ESOP FUND ESOP FUND FUND TOTAL -------------------------------------------------------------- December 31, 1995 - ----------------- Investments at fair value: PNC Bank common stock $93,638,621 $123,359,669 $ $411,707,599 PNC Bank preferred stock - - - 42,224 Short-term investments PNC Funds: Money Market Portfolio 5,123,759 678,245 500,962 67,302,448 Registered investment companies PNC Funds: Small Cap Growth Equity Portfolio - - - 7,672,930 International Equity Portfolio - - - 22,319,064 Small Cap Value Equity Portfolio - - - 6,810,828 International Emerging Markets Portfolio - - - 4,185,333 Growth Equity Portfolio - - - 17,151,237 Intermediate Term Bond Portfolio - - - 18,139,072 Managed Income Portfolio - - - 31,003,125 Core Equity Portfolio - - - 29,285,309 Value Equity Portfolio - - - 24,647,941 Participant loans - - 22,417,465 22,417,465 --------------------------------------------------------------- Total investments 98,762,380 124,037,914 22,918,427 662,684,575 Contribution receivable - - - 1,137,814 Accrued income 20,207 26,671 2,614 342,424 Due to (from) fund/other assets (liabilities) (1,663,861) 2,172,487 - 3,341,963 --------------------------------------------------------------- Total assets 97,118,726 126,237,072 22,921,041 667,506,776 ESOP note payable - (84,600,000) - (84,600,000) Accrued interest payable - (2,474,860) - (2,474,860) -------------------------------------------------------------- Net assets available for plan benefits $97,118,726 $ 39,162,212 $22,921,041 $580,431,916 ==============================================================
13 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The changes in net assets available for plan benefits for PNC Plan's investment funds were as follows:
INTERMEDIATE- TERM FIXED SHORT-TERM PNC BANK EQUITY INCOME-- FIXED INCOME CORP. STOCK FUND A FUND B --FUND C --FUND D ------------------------------------------------------------------- Year ended December 31, 1996 - ---------------------------- Net assets available for plan benefits at January 1, 1996 $117,765,737 $50,564,837 $56,466,541 $196,432,822 Additions: Interest and dividends 14,223,180 3,117,454 2,986,829 8,485,432 Contributions: Employer 388,627 210,492 334,080 - Employee 12,168,014 4,732,087 4,339,927 5,962,823 Rollover 621,723 174,936 117,984 125,740 Deductions: Payments to participants or beneficiaries (10,373,636) (4,327,773) (7,096,642) (18,739,547) Net transfers 9,393,905 363,674 1,066,451 (8,850,524) ESOP activity: Interest expense - - - - Other ESOP activity - - - 274,593 Net realized and unrealized appreciation (depreciation) 10,559,150 (1,148,495) - 31,567,066 Net assets received in mergers (divestitures) 1,350,104 1,730,331 2,254,577 3,096,298 ------------------------------------------------------------------- Net assets available for plan benefits at December 31, 1996 $156,096,804 $55,417,543 $60,469,746 $218,354,703 ===================================================================
PNC PNC BANK CORP. BANK CORP. ALLOCATED UNALLOCATED LOAN ESOP FUND ESOP FUND FUND TOTAL -------------------------------------------------------------- - Year ended December 31, 1996 - ---------------------------- Net assets available for plan benefits at January 1, 1996 $ 97,118,726 $39,162,212 $22,921,041 $580,431,916 Additions: Interest and dividends 4,468,745 5,111,344 1,884,616 40,277,600 Contributions: Employer - 11,365,000 - 12,298,198 Employee - - - 27,202,851 Rollover - - - 1,040,383 Deductions: Payments to participants or beneficiaries (9,177,493) - (337,222) (50,052,313) Net transfers (1,013,995) - (959,511) - ESOP activity: Interest expense - (4,309,434) - (4,309,434) Other ESOP activity 22,536,507 (22,811,100) - - Net realized and unrealized appreciation (depreciation) 18,801,955 15,919,377 - 75,699,053 Net assets received in mergers (divestitures) (1,115,174) - 198,324 7,514,460 -------------------------------------------------------------- Net assets available for plan benefits at December 31, 1996 $131,619,271 $44,437,399 $23,707,248 $690,102,714 ==============================================================
14 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The changes in net assets available for plan benefits for PNC Plan's investment funds were as follows:
INTERMEDIATE- TERM FIXED SHORT-TERM PNC BANK EQUITY INCOME-- FIXED INCOME CORP. STOCK FUND A FUND B --FUND C --FUND D ------------------------------------------------------------------ Year ended December 31, 1995 - ---------------------------- Net assets available for plan benefits at January 1, 1995 $84,844,684 $41,241,523 $56,055,165 $128,538,629 Additions: Interest and dividends 7,078,293 3,393,605 3,301,774 8,115,915 Contributions: Employer 337,875 234,303 364,228 5,081,098 Employee 10,853,233 5,054,317 4,968,154 5,945,680 Deductions: Payments to participants or beneficiaries (9,401,501) (5,443,852) (9,734,173) (16,950,926) Net transfers 3,264,705 565,126 (1,889,202) (1,724,997) ESOP activity: Interest expense - - - - Other ESOP activity - - - (2,666,394) Net realized and unrealized appreciation 17,252,318 3,488,432 - 66,770,788 Net assets received in mergers 3,536,130 2,031,383 3,400,595 3,323,029 ------------------------------------------------------------------ Net assets available for plan benefits at December 31, 1995 $117,765,737 $50,564,837 $56,466,541 $196,432,822 ==================================================================
PNC PNC BANK CORP. BANK CORP. ALLOCATED UNALLOCATED LOAN ESOP FUND ESOP FUND FUND TOTAL -------------------------------------------------------------- Year ended December 31, 1995 - ---------------------------- Net assets available for plan benefits at January 1, 1995 $58,971,446 $ (6,388,673) $24,971,942 $388,234,716 Additions: Interest and dividends 3,755,857 7,643,759 1,650,969 34,940,172 Contributions: Employer - 8,525,000 - 14,542,504 Employee - - - 26,821,384 Deductions: Payments to participants or beneficiaries (6,547,113) - (3,718,570) (51,796,135) Net transfers (1,533,238) 1,315,047 2,559 - ESOP activity: Interest expense - (4,949,720) - (4,949,720) Other ESOP activity 10,336,081 (7,669,687) - - Net realized and unrealized appreciation 32,135,693 40,686,486 - 160,333,717 Net assets received in mergers - - 14,141 12,305,278 -------------------------------------------------------------- Net assets available for plan benefits at December 31, 1995 $97,118,726 $39,162,212 $22,921,041 $580,431,916 ==============================================================
15 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 4. TRANSACTIONS WITH PARTIES-IN-INTEREST The asset management group of PNC Bank, N.A., a wholly owned indirect subsidiary of PNC Bank, administers the plan assets, maintains discretionary investment power, and is the safekeeping agent. PNC Bank pays administrative costs incurred by the PNC Plan. The asset management group of PNC Bank, Ohio, N.A., a wholly owned indirect subsidiary of PNC Bank, administers the ESOP assets of the PNC Plan. The PNC Plan also holds shares of registered investment companies (Compass Capital Funds, formerly PNC Funds) which are sponsored and administered by wholly owned subsidiaries of PNC Bank or its subsidiaries. 5. INCOME TAX STATUS The Internal Revenue Service ruled June 21, 1995 that the PNC Plan qualifies under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the related trust is not subject to tax under present income tax law. Once qualified, the PNC Plan is required to operate in conformity with the IRC to maintain its qualification. The Plan Administrator is not aware of any course of action or series of events that have occurred that might adversely affect PNC Plan's qualified status. 6. PLAN MERGERS AND DIVESTITURES In 1996, defined contribution plans for Chemical Bank NJ, N.A. and Project Management Systems were merged into the Plan, with assets of $14,000,000 and $225,000, respectively. As of July 1, 1996, a new defined contribution plan, known as the PNC Retirement Savings Plan, was developed for employees of PNC Mortgage Corp. of America, a wholly owned indirect subsidiary of PNC Bank, and its related affiliates. These employees were previously eligible to participate in the Incentive Savings Plan. Assets previously invested through the Incentive Savings Plan were transferred to the PNC Retirement Savings Plan for all applicable employees who did not meet the grandfathering requirements set forth by the plan and those grandfathered employees who elected to participate in the PNC Retirement Savings Plan. As participants are not permitted to contribute to both plans, all contributions subsequent to June 30, 1996, are included in the PNC Retirement Savings Plan assets. Approximately $7.1 million in assets held for 2,246 participants were transferred from the PNC Plan to the PNC Retirement Savings Plan effective July 1, 1997. 16 PNC Bank Corp. Incentive Savings Plan Notes to Financial Statements (continued) 7. SUBSEQUENT EVENT On January 1, 1997, The Midlantic Savings and Investment Plan, a defined contribution plan, was merged into the PNC Plan, adding approximately 3,500 new participants and assets totaling $85 million. 17 PNC Bank Corp. Incentive Savings Plan Schedule of Assets Held for Investment December 31, 1996
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ----------------------------------------------------------------------------------------------------- EQUITY--FUND A Registered Investment Companies - ------------------------------- Compass Capital Funds--Small Cap Growth Equity Portfolio Fund 093 Institutional Class 299,655 shares $ 3,664,613 $ 5,915,193 Compass Capital Funds--International Equity Portfolio Fund 065 Institutional Class 2,331,009 shares 30,113,880 30,722,695 Compass Capital Funds--Small Cap Value Equity Portfolio Fund 046 Institutional Class 386,490 shares 5,392,195 5,851,453 Compass Capital Funds--International Emerging Markets Portfolio Fund 015 Institutional Class 838,436 shares 7,056,755 7,252,467 Compass Capital Funds--Growth Equity Portfolio Fund 029 Institutional Class 1,899,238 shares 22,329,085 28,051,743 Compass Capital Funds--Core Equity Portfolio Fund 095 Institutional Class 1,832,117 shares 22,110,735 24,843,512
18 Schedule of Assets Held for Investment (continued)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ----------------------------------------------------------------------------------------------------- Compass Capital Funds--Value Equity Portfolio Fund 089 Institutional Class 1,984,260 shares $ 24,839,414 $ 28,136,804 Compass Capital Funds--Mid Cap Growth Equity Portfolio Fund 044 Institutional Class 870,000 shares 8,700,000 8,734,800 Compass Capital Funds--Mid Cap Equity Portfolio Fund 035 Institutional Class 870,000 shares 8,700,000 8,700,000 Interest-Bearing Cash - --------------------- Compass Capital Money Market Institutional Class 3,608,542 shares 3,608,542 3,608,542 ------------------------------------ Total Equity--Fund A $136,515,219 $151,817,209
19 Schedule of Assets Held for Investment (continued)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ----------------------------------------------------------------------------------------------------- INTERMEDIATE-TERM FIXED INCOME--FUND B Registered Investment Companies - ------------------------------- Compass Capital Funds--Intermediate Term Bond Portfolio Fund 090 Institutional Class 2,171,583 shares $ 20,054,901 $ 20,412,876 Compass Capital Funds--Managed Income Portfolio Fund 013 Institutional Class 3,192,579 shares 32,190,992 32,755,855 Interest-Bearing Cash - --------------------- PNC Money Market Institutional Class 1,269,510 shares 1,269,510 1,269,510 Other 234,303 shares 355,177 329,144 - ----- ------------------------------------ Total Intermediate-Term Fixed Income--Fund B $ 53,870,580 $ 54,767,385
20 Schedule of Assets Held for Investment (continued)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ------------------------------------------------------------------------------------------------------ SHORT-TERM FIXED INCOME--FUND C Interest-Bearing Cash - --------------------- PNC Money Market Institutional Class 55,791,123 shares $ 55,791,123 $ 55,791,123 PNC BANK CORP. STOCK--FUND D Common Stock - ------------ PNC Bank Corp. 5,690,311 shares 121,997,222 214,097,952 Preferred Stock - --------------- PNC Bank Corp. 679 shares 7,080 42,607 Interest-Bearing Cash - --------------------- PNC Money Market Institutional Class 1,270,280 shares 1,270,280 1,270,280 ----------------------------------- Total PNC Bank Corp. Stock-- Fund D $ 123,274,582 $ 215,410,839
21 Schedule of Assets Held for Investment (continued)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ------------------------------------------------------------------------------------------------------ ESOP ACCOUNT Common Stock - ------------ PNC Bank Corp: Allocated Account 3,412,697 shares $ 65,938,401 $128,402,725 Unallocated Account 3,184,324 shares 60,278,858 119,810,191 Interest-Bearing Cash - --------------------- PNC Money Market Institutional Class 3,243,072 shares 3,243,072 3,243,072 ------------------------------------- Total ESOP Account $ 129,460,331 $251,455,988
22 Schedule of Assets Held for Investment (continued)
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF OR SIMILAR ENTITY INVESTMENT COST FAIR VALUE - ------------------------------------------------------------------------------------------------------ LOAN FUND Installment Loans - ----------------- March 1992 through December 1996; rates ranging from 6.00% to 10.00%; maturing January 1, 1997 through January 17, 2002 $ 24,299,686 $ 24,299,686 Mortgage Loans January 1989 through December 1996; rates ranging from 6.00% to 11.50%; maturing January 1, 1997 through January 19, 2012 3,123,548 3,123,548 ------------------------------------- 27,423,234 27,423,234 PNC Money Market Institutional Class 378,090 shares 262,250 262,250 ------------------------------------- Total Loan Fund 27,685,484 27,685,484 ------------------------------------- Total PNC Bank Corp. Incentive Savings Plan $526,597,319 $756,928,028 =====================================
23 PNC Bank Corp. Incentive Savings Plan Schedule of Reportable Transactions Year ended December 31, 1996
FAIR VALUE COST OF ASSETS ON NET PURCHASE SELLING OF TRANSACTION GAIN DESCRIPTION OF ASSETS PRICE PRICE ASSETS DATE (LOSS) - ---------------------------------------------------------------------------------------------------------------- Category (iii)--Series of securities transactions - ------------------------------------------------- PNC Money Market Portfolio #1 Institutional Class ------------------------------------------------- 122,982,289 shares $122,982,289 $ -- $122,982,289 $122,982,289 $ -- 125,838,253 shares -- 125,838,253 125,838,253 125,838,253 -- PNC Bank Corp. Common Stock --------------------------- 922,708 shares 28,742,051 -- 28,742,051 28,742,051 -- 629,352 shares -- 19,815,752 13,094,578 19,815,752 6,721,174
There were no category (i), (ii) or (iv) reportable transactions during 1996. 24 Midlantic Savings and Investment Plan Audited Financial Statements CONTENTS Report of Independent Auditors ..........................................26 Audited Financial Statements Statements of Net Assets Available for Plan Benefits as of December 31, 1996 and 1995.............................................27 Statements of Changes in Net Assets Available for Plan Benefits for the years ended December 31, 1995..................................28 Notes to Financial Statements............................................29 Schedules Schedule of Assets Held for Investment ..................................38 Schedule of Reportable Transactions .....................................39
25 Report of Independent Auditors Administrative Committee Midlantic Savings and Investment Plan We have audited the accompanying statements of net assets available for plan benefits of the Midlantic Savings and Investment Plan (Plan) as of December 31, 1996 and 1995, and the related statements of changes in net assets available for plan benefits for the years then ended. These financial statements are the responsibility of the Plan s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 1996 and 1995, and the changes in its net assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment as of December 31, 1996, and reportable transactions for the year ended December 31, 1996, are presented for purposes of complying with the Department of Labor s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The supplemental schedules have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. June 23, 1997 Pittsburgh, Pennsylvania 26 Midlantic Savings and Investment Plan Statements of Net Assets Available for Plan Benefits
DECEMBER 31 1996 1995 ----------------------------------- ASSETS Investments at fair value: PNC Bank Corp. common stock (1996 cost--$17,744,532; 1995 cost--$20,937,356) $ 49,354,479 $53,231,585 Registered investment companies: Compass Capital Funds Growth Equity Portfolio (1996 cost--$8,614,756; 1995 cost--$8,052,737) 10,582,043 9,443,510 Core Bond Portfolio (1996 cost--$5,496,448; 1995 cost--$5,722,767) 5,529,284 5,973,714 Money Market Portfolio (1996 cost--$11,983,158; 1995 cost--$9,472,135) 11,983,158 9,472,135 Value Equity Portfolio (1996 cost--$15,201,346; 1995 cost--$10,801,479) 15,103,894 11,808,394 Short Government Bond Portfolio (1996 cost--$4,376,242; 1995 cost--$4,798,846) 4,389,764 4,855,079 Balanced Portfolio (1996 cost--$1,257,948; 1995 cost--$830,672) 1,339,985 879,741 ----------------------------------- Total investments 98,282,607 95,664,158 Dividends receivable 906,741 - Employer contribution receivable 1,195,571 - Due from broker for securities sold 1,114,035 656,342 Accrued income 53,211 10,431 ----------------------------------- Total assets 101,552,165 96,330,931 LIABILITIES Due to broker for securities purchased - 1,719,905 ----------------------------------- Net assets available for plan benefits $101,552,165 $94,611,026 ===================================
See accompanying notes. 27 Midlantic Savings and Investment Plan Statements of Changes in Net Assets Available for Plan Benefits
YEAR ENDED DECEMBER 31 1996 1995 ------------------------------------ Additions: Investment income: Interest $ 659,848 $ 403,084 Dividends: PNC Bank Corp. 2,170,902 1,001,430 Other 927,099 717,339 ------------------------------------ 3,757,849 2,121,853 Contributions (employer) 4,181,232 5,186,082 Contributions (employee and rollover) 6,312,902 7,080,721 Net transfers from other plans 719,471 - ------------------------------------ Total additions 14,971,454 14,388,656 Deductions: Payments to participants or beneficiaries 19,585,288 4,632,538 Administrative expense - 35,654 ------------------------------------ Total deductions 19,585,288 4,668,192 Net miscellaneous disbursements - (203) Net realized and unrealized appreciation in fair value of investments 11,554,973 37,787,302 ------------------------------------ Net increase 6,941,139 47,507,563 Net assets available for plan benefits at beginning of year 94,611,026 47,103,463 ------------------------------------ Net assets available for plan benefits at end of year $101,552,165 $94,611,026 ====================================
See accompanying notes. 28 Midlantic Savings and Investment Plan Notes to Financial Statements December 31, 1996 1. DESCRIPTION OF THE PLAN Effective December 31, 1995, Midlantic Corporation was merged into a wholly owned subsidiary of PNC Bank Corp. and all outstanding common shares of Midlantic Corporation common stock were exchanged for 2.05 shares of PNC Bank Corp. common stock. The subsidiaries of the former Midlantic Corporation are now wholly owned indirect subsidiaries of PNC Bank Corp. Concurrent with the merger, PNC Bank Corp. became the sponsor of the Midlantic Savings and Investment Plan ("Midlantic Plan"). Prior to the merger, the Midlantic Plan sponsor was Midlantic Corporation. The Midlantic Plan covers substantially all eligible employees of the former Midlantic Corporation and subsidiaries. Employees are eligible on the first day of the month coinciding with, or immediately following, the date on which three continuous months of service are completed. The Midlantic Plan allows participants to contribute from 1 to 15 percent of their compensation on a pretax 401(k) basis. The Midlantic Plan sponsor matches 100 percent of employee contributions up to 3 percent of compensation, subject to Internal Revenue Service (IRS) limitations. Additionally, the Midlantic Plan sponsor may also make a discretionary matching contribution on the next 2 percent of compensation. For the year ended December 31, 1996, the Midlantic Plan sponsor elected to contribute a discretionary match of 2 percent of compensation of eligible participants which totaled $1,195,571. All participant contributions to the Midlantic Plan are 100 percent vested (nonforfeitable) at all times. For participants hired on or prior to April 1, 1993, any contributions made by the Midlantic Plan sponsor under the Midlantic Plan are 100 percent vested. Participants hired after April 1, 1993 become vested in the participating employer's matching contributions evenly over three years of employment. Forfeitures are used to offset the employer discretionary match in future periods. Midlantic Plan income is allocated to participants based on an average participant investment balance on a monthly basis. Under certain circumstances, the Midlantic Plan permits withdrawals by participants. All participant and Midlantic Plan sponsor contributions are held in a trust fund (Trust). In addition, all distributions which participants did not elect to receive in cash from the Midlantic Profit Sharing Plan, a predecessor plan, and balances rolled over from any prior plans are held in the Trust. The 29 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 1. DESCRIPTION OF THE PLAN (CONTINUED) Trust Department of PNC Bank, N.A., a wholly owned indirect subsidiary of PNC Bank Corp., has been appointed to act as custodian and trustee of the Midlantic Plan. The Trust is divided into seven funds for investment purposes: Fund A (Compass Capital Growth Equity Portfolio), Fund B (Compass Capital Core Bond Portfolio), Fund C (PNC Bank Corp. common stock), Fund D (Compass Capital Money Market Portfolio), Fund E (Compass Capital Value Equity Portfolio), Fund F (Compass Capital Short Government Bond Portfolio), and Fund G (Compass Capital Balanced Portfolio). Each participant designates the funds into which his/her share of the contributions will be invested. Benefits to participants for distributions requested but yet to be paid amounted to $16,330,805 and $7,298,625 as of December 31, 1996 and 1995, respectively. Although it has not expressed an interest to do so, PNC Bank has the right under the Midlantic Plan to discontinue contributions at any time and to terminate the Plan subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The summary plan description and plan agreement should be referred to for a complete description of the Plan. 2. SIGNIFICANT ACCOUNTING POLICIES VALUATION Marketable securities are stated at fair value. Securities are valued at the last public sale price of the securities listed on the New York Stock Exchange. If no sales were reported, and in the case of securities traded over the counter, the last bid price at the close of business is used. The value of any security not listed or quoted on any exchange is determined by the last closing bid price, reference to the bid price of any published quotations in common use, or by the quotation of a reputable broker. For certain investments that do not have an established fair value, such value is established based on the opinion of the trustee. The fair value of the shares in registered investment companies are based on quoted redemption values on the last business day of the plan year. The Midlantic Plan's assets are concentrated in the stock and bond markets. Realization of the respective values shown on the statements of net assets available for plan benefits is subject to the results of these markets. 30 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) VALUATION (CONTINUED) The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from such estimates and such differences may be material to the financial statements. 3. INVESTMENTS The Midlantic Plan is comprised of investment funds representing both the employer's and the participants' contributions. Records are maintained to account for the noncontributory and the voluntary portion of each fund. Net realized and unrealized appreciation (depreciation) in aggregate fair value of investments was as follows:
NET REALIZED AND UNREALIZED APPRECIATION (DEPRECIATION) IN FAIR VALUE FOR YEAR ENDED ------------------------------------ DECEMBER 31 1996 1995 ------------------------------------ Compass Capital Growth Equity Portfolio $ 1,848,500 $ 1,713,803 Compass Capital Core Bond Portfolio (186,601) 474,191 PNC Bank Corp. common stock 7,083,683 33,390,416 Compass Capital Value Equity Portfolio 2,714,185 1,970,201 Compass Capital Short Government Bond Portfolio (46,266) 175,744 Compass Capital Balanced Portfolio 141,472 62,997 Other - (50) ------------------------------------ $11,554,973 $37,787,302 ====================================
31 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The fair values of individual investments that represent 5 percent or more of the Midlantic Plan's net assets are as follows:
DECEMBER 31 1996 1995 ------------------------------------ Compass Capital Growth Equity Portfolio $10,582,043 $ 9,443,510 Compass Capital Core Bond Portfolio 5,529,284 5,973,714 PNC Bank Corp. common stock 49,354,479 53,231,585 Compass Capital Money Market Portfolio 11,983,158 9,472,135 Compass Capital Value Equity Portfolio 15,103,894 11,808,394 Compass Capital Short/Intermediate Fund - 4,855,079
Effective January 12, 1996, the Compass Funds were merged with the funds from PNC Bank Corp. Such funds are administered and managed by wholly owned subsidiaries of PNC Bank Corp. and its subsidiaries. The new funds are called Compass Capital Funds and equate to the current Midlantic Corporation funds as follows:
FORMER MIDLANTIC CORPORATION PNC BANK CORP. FUND COMPASS FUNDS COMPASS CAPITAL FUNDS - ---------------------------------------------------------------------------------------------- A Growth Fund Growth Equity Portfolio B Fixed Income Fund Core Bond Portfolio D Cash Reserve Fund Money Market Portfolio E Equity Income Fund Value Equity Portfolio F Short/Intermediate Fund Short Government Bond Portfolio G Balanced Fund Balanced Portfolio
32 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The net assets available for plan benefits for the Midlantic Plan's investment funds were either in Compass Capital mutual funds or PNC Bank Corp. common stock as follows:
PNC BANK MONEY GROWTH EQUITY CORE BOND CORP. COMMON MARKET PORTFOLIO-- PORTFOLIO STOCK-- PORTFOLIO FUND A FUND B FUND C FUND D -------------------------------------------------------------- December 31, 1996 - ----------------- Investments at fair value: PNC Bank Corp. common stock $ - $ - $49,354,479 $ - Registered investment companies Compass Capital funds: Growth Equity Portfolio 10,582,043 - - - Core Bond Portfolio - 5,529,284 - - Money Market Portfolio 333,109 315,482 1,605,864 8,976,284 Value Equity Portfolio - - - - Short Government Bond Portfolio - - - - Balanced Portfolio - - - - ----------------------------------------------------------- Total investments 10,915,152 5,844,766 50,960,343 8,976,284 Dividends receivable - - 906,741 - Employer contribution receivable 214,610 136,851 252,263 84,970 Due from broker for securities sold 378,090 178,718 - - Accrued income 1,558 1,442 6,258 40,133 ----------------------------------------------------------- Net assets available for plan benefits $11,509,410 $6,161,777 $52,125,605 $9,101,387 ===========================================================
SHORT VALUE EQUITY GOVERNMENT BALANCED PORTFOLIO BOND PORTFOLIO PORTFOLIO FUND E FUND F FUND G TOTAL ------------------------------------------------------------ December 31, 1996 - ----------------- Investments at fair value: PNC Bank Corp. common stock $ - $ - $ - $ 49,354,479 Registered investment companies Compass Capital funds: Growth Equity Portfolio - - - 10,582,043 Core Bond Portfolio - - - 5,529,284 Money Market Portfolio 454,655 223,018 74,746 11,983,158 Value Equity Portfolio 15,103,894 - - 15,103,894 Short Government Bond Portfolio - 4,389,764 - 4,389,764 Balanced Portfolio - - 1,339,985 1,339,985 ------------------------------------------------------------ Total investments 15,558,549 4,612,782 1,414,731 98,282,607 Dividends receivable - - - 906,741 Employer contribution receivable 372,752 98,254 35,871 1,195,571 Due from broker for securities sold 385,945 171,282 - 1,114,035 Accrued income 2,224 1,308 288 53,211 ------------------------------------------------------------ Net assets available for plan benefits $16,319,470 $4,883,626 $1,450,890 $101,552,165 ============================================================
33 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED)
PNC BANK GROWTH FIXED CORP. COMMON CASH FUND-- INCOME FUND-- STOCK-- RESERVE FUND-- FUND A FUND B FUND C FUND D ----------------------------------------------------------------- December 31, 1995 - ----------------- Investments at fair value: PNC Bank Corp. common stock $ - $ - $ 53,231,585 $ - Registered investment companies Compass Capital funds: Growth Fund 9,443,510 - - - Fixed Income Fund - 5,973,714 - - Cash Reserve Fund 283,224 268,543 421,659 7,727,571 Equity Income Fund - - - - Short/Intermediate Fund - - - - Balanced Fund - - - - ----------------------------------------------------------------- Total investments 9,726,734 6,242,257 53,653,244 7,727,571 Due from broker for securities sold - - 656,342 - Accrued income 175 160 291 9,371 ----------------------------------------------------------------- Total assets 9,726,909 6,242,417 54,309,877 7,736,942 Due to broker for securities purchased 324,924 376,843 - - ----------------------------------------------------------------- Net assets available for plan benefits $9,401,985 $5,865,574 $54,309,877 $7,736,942 =================================================================
SHORT/ EQUITY INTERMEDIATE BALANCED INCOME FUND-- FUND-- FUND-- FUND E FUND F FUND G TOTAL ----------------------------------------------------------------- December 31, 1995 - ----------------- Investments at fair value: PNC Bank Corp. common stock $ - $ - $ - $53,231,585 Registered investment companies Compass Capital funds: Growth Fund - - - 9,443,510 Fixed Income Fund - - - 5,973,714 Cash Reserve Fund 555,822 176,948 38,368 9,472,135 Equity Income Fund 11,808,394 - - 11,808,394 Short/Intermediate Fund - 4,855,079 - 4,855,079 Balanced Fund - - 879,741 879,741 ----------------------------------------------------------------- Total investments 12,364,216 5,032,027 918,109 95,664,158 Due from broker for securities sold - - - 656,342 Accrued income 301 114 19 10,431 ----------------------------------------------------------------- Total assets 12,364,517 5,032,141 918,128 96,330,931 Due to broker for securities purchased 627,922 276,548 113,668 1,719,905 ----------------------------------------------------------------- Net assets available for plan benefits $ 11,736,595 $4,755,593 $804,460 $94,611,026 =================================================================
34 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 3. INVESTMENTS (CONTINUED) The changes in net assets available for plan benefits for the Midlantic Plan's investment funds were as follows:
PNC BANK MONEY GROWTH EQUITY CORE BOND CORP. COMMON MARKET PORTFOLIO-- PORTFOLIO STOCK-- PORTFOLIO FUND A FUND B FUND C FUND D ----------------------------------------------------------------- Year ended December 31, 1996 - ---------------------------- Net assets available for plan benefits January 1, 1996 $ 9,401,985 $5,865,574 $54,309,877 $7,736,942 Additions: Interest income 15,376 44,669 14,194 456,547 Dividends: PNC Bank Corp - - 2,170,902 - Others 43,999 323,205 - - Contributions: Employer 673,300 530,620 891,652 324,570 Employee 975,454 778,953 1,249,116 493,048 Rollover 9,486 6,317 309,604 4,823 Deductions: Payments to participants (cash) (2,082,442) (1,292,124) (5,575,427) (3,702,700) Payments to participants (stock) - - (2,909,158) - Net transfers 623,752 82,867 (5,418,838) 3,468,354 Transfers from other plans - 8,297 - 319,803 Net realized and unrealized appreciation (depreciation) 1,848,500 (186,601) 7,083,683 - ----------------------------------------------------------------- Net assets available for plan benefits at December 31, 1996 $11,509,410 $6,161,777 $52,125,605 $9,101,387 =================================================================
SHORT VALUE EQUITY GOVERNMENT BALANCED PORTFOLIO BOND PORTFOLIO PORTFOLIO FUND E FUND F FUND G TOTAL ----------------------------------------------------------------- Year ended December 31, 1996 - ---------------------------- Net assets available for plan benefits January 1, 1996 $11,736,595 $4,755,593 $ 804,460 $ 94,611,026 Additions: Interest income 80,723 34,614 13,725 659,848 Dividends: PNC Bank Corp - - - 2,170,902 Others 306,849 225,858 27,188 927,099 Contributions: Employer 1,250,007 397,017 114,066 4,181,232 Employee 1,749,728 524,167 153,728 5,924,194 Rollover 51,834 - 6,644 388,708 Deductions: Payments to participants (cash) (2,542,723) (1,201,359) (279,355) (16,676,130) Payments to participants (stock) - - - (2,909,158) Net transfers 742,298 181,891 319,676 - Transfers from other plans 229,974 12,111 149,286 719,471 Net realized and unrealized appreciation (depreciation) 2,714,185 (46,266) 141,472 11,554,973 ----------------------------------------------------------------- Net assets available for plan benefits at December 31, 1996 $16,319,470 $4,883,626 $1,450,890 $101,552,165 =================================================================
35 MIDLANTIC SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. INVESTMENTS (CONTINUED) The changes in net assets available for plan benefits for the Midlantic Plan's investment funds were as follows:
MIDLANTIC FIXED CORPORATION/ CASH GROWTH INCOME PNC BANK CORP. RESERVE FUND-- FUND-- COMMON STOCK-- FUND-- FUND A FUND B FUND C FUND D ----------------------------------------------------------------- Year ended December 31, 1995 - ---------------------------- Net assets available for plan benefits January 1, 1995 $6,131,219 $3,482,273 $22,011,274 $6,670,017 Additions: Interest income 3,075 2,346 7,572 383,390 Dividends: Midlantic Corporation - - 1,001,430 - Others 59,198 250,274 - - Contributions: Employer 765,557 755,814 1,086,967 447,460 Employee 982,475 987,239 1,350,907 566,124 Rollover 75,578 61,080 94,320 25,225 Deductions: Payments to participants (cash) (411,071) (237,997) (1,711,633) (792,409) Payments to participants (stock) - - (751,443) - Administrative expenses - - (34,279) - Net miscellaneous receipts and (disbursements) (1) (172) 1,698 1,289 Net transfers 82,152 90,526 (2,137,352) 435,846 Net realized and unrealized appreciation (depreciation) 1,713,803 474,191 33,390,416 - ----------------------------------------------------------------- Net assets available for plan benefits at December 31, 1995 $9,401,985 $5,865,574 $54,309,877 $7,736,942 =================================================================
EQUITY SHORT/ INCOME INTERMEDIATE BALANCED FUND-- FUND-- FUND-- FUND E FUND F FUND G OTHER TOTAL --------------------------------------------------------------------------- Year ended December 31, 1995 - ---------------------------- Net assets available for plan benefits January 1, 1995 $ 5,356,823 $3,447,702 $ - $4,155 $47,103,463 Additions: Interest income 4,465 1,898 223 115 403,084 Dividends: Midlantic Corporation - - - - 1,001,430 Others 165,093 227,850 14,924 - 717,339 Contributions: Employer 1,506,509 536,047 87,728 - 5,186,082 Employee 1,955,062 701,668 110,117 - 6,653,592 Rollover 116,500 9,435 44,991 - 427,129 Deductions: Payments to participants (cash) (476,548) (249,918) (1,519) - (3,881,095) Payments to participants (stock) - - - - (751,443) Administrative expenses - - - (1,375) (35,654) Net miscellaneous receipts and (disbursements) (172) - - (2,845) (203) Net transfers 1,138,662 (94,833) 484,999 - - Net realized and unrealized appreciation (depreciation) 1,970,201 175,744 62,997 (50) 37,787,302 --------------------------------------------------------------------------- Net assets available for plan benefits at December 31, 1995 $ 11,736,595 $4,755,593 $804,460 $ - $94,611,026 ===========================================================================
36 Midlantic Savings and Investment Plan Notes to Financial Statements (continued) 4. SUBSEQUENT EVENTS On January 1, 1997, the Midlantic Savings and Investment Plan was merged with PNC Bank Corp.'s Incentive Savings Plan. 5. TRANSACTIONS WITH PARTIES-IN-INTEREST The asset management group of PNC Bank, N.A., a wholly owned indirect subsidiary of PNC Bank, administers the plan assets, maintains discretionary investment power, and is the safekeeping agent. PNC Bank pays administrative costs incurred by the Midlantic Plan. The Midlantic Plan also holds shares of registered investment companies (Compass Capital Funds, formerly PNC Funds) which are sponsored and administered by wholly owned subsidiaries of PNC Bank or its subsidiaries. 6. INCOME TAX STATUS The Midlantic Plan has received a favorable letter of determination from the IRS dated June 2, 1995 which states that the Plan qualifies under Section 401(a) of the Internal Revenue Code. The Plan Administrator is not aware of any events or actions that have occurred in the operation of the Midlantic Plan that would result in its disqualification. 37 Midlantic Savings and Investment Plan Schedule of Assets Held for Investment December 31, 1996
UNITS/ FAIR DESCRIPTION OF INVESTMENT SHARES COST VALUE - ------------------------------------------------------------------------------------------------------------- Compass Capital Funds: Growth Equity Portfolio (Fund A) 716,455 $ 8,614,575 $10,582,043 Core Bond Portfolio (Fund B) 571,798 5,496,448 5,529,284 Money Market Portfolio (Fund D) 11,983,158 11,983,158 11,983,158 Value Equity Portfolio (Fund E) 1,065,155 15,201,346 15,103,894 Short Government Bond Portfolio (Fund F) 445,209 4,376,241 4,389,764 Balanced Portfolio (Fund G) 86,618 1,257,948 1,339,985 --------------------------------- 46,929,716 48,928,128 Common Stock: PNC Bank Corp. common stock (Fund C) 1,301,315 17,744,532 49,354,479 --------------------------------- Total $64,674,248 $98,282,607 =================================
38 Midlantic Savings and Investment Plan Schedule of Reportable Transactions December 31, 1996
FAIR VALUE OF INVESTMENTS ON NET UNITS/ PURCHASE SELLING COST OF TRANSACTION GAIN DESCRIPTION OF INVESTMENT SHARES PRICE PRICE INVESTMENTS DATE (LOSS) - ---------------------------------------------------------------------------------------------------------------------- Category (iii)--Series of securities transactions in excess of 5% of plan assets - -------------------------------------------------------------------------------- Compass Capital Money Market Portfolio 41,869,954 $41,869,954 $ - $41,869,954 $41,869,954 $- Compass Capital Money Market Portfolio 40,621,241 - 40,621,241 40,621,241 40,621,241 -
There were no category (i), (ii), or (iv) reportable transactions during 1996. 39 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, PNC Bank Corp. has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. PNC BANK CORP. (Registrant) By /s/ ROBERT L. HAUNSCHILD -------------------------- Robert L. Haunschild Senior Vice President and Chief Financial Officer Date: June 30, 1997 40 EXHIBIT INDEX 3.1 Articles of Incorporation of the Corporation, as amended, incorporated herein by reference to Exhibit 99.1 and 99.2 of the Current Report on Form 8-K dated October 7, 1996. 3.2 By-Laws of the Corporation, as amended, incorporated herein by reference to Exhibit 4.2 of the Corporation's Registration Statement on Form S-8 at File No. 33-62311. 4.1 Instruments defining the rights of holders of long-term debt of the Corporation and its subsidiaries are not filed as Exhibits because the amount of debt under each instrument is less than 10 percent of the consolidated assets of the Corporation. The Corporation undertakes to file these instruments with the Commission on request. 4.2 Designation of Series: $1.80 Cumulative Convertible Preferred Stock -- Series A, incorporated herein as part of Exhibit 3.1. 4.3 Designation of Series: $1.80 Cumulative Convertible Preferred Stock -- Series B, incorporated herein as part of Exhibit 3.1. 4.4 Designation of Series: $1.60 Cumulative Convertible Preferred Stock -- Series C, incorporated herein as part of Exhibit 3.1. 4.5 Designation of Series: $1.80 Cumulative Convertible Preferred Stock -- Series D, incorporated herein as part of Exhibit 3.1. 4.6 Designation of Series: Fixed/Adjustable Rate Noncumulative Preferred Stock - Series F, incorporated herein as part of Exhibit 3.1. 10.1 Supplemental Executive Retirement Income and Disability Plan of the Corporation, incorporated herein by reference to Exhibit 10.2 of the Annual Report on Form 10-K for the year ended December 31, 1990 ("1990 Form 10-K").* 10.2 Amendments to Supplemental Executive Retirement Income and Disability Plan, filed as Exhibit 10.2 to the 1996 Form 10-K.* 10.3 Supplemental Executive Life Insurance and Spouse's Benefit Plan of the Corporation, incorporated herein by reference to Exhibit 10.3 of the 1990 Form 10-K.* 10.4 November 21, 1996 Amendment to Supplemental Executive Life Insurance and Spouse's Benefit Plan, filed as Exhibit 10.4 to the 1996 Form 10-K.* 10.5 1992 Long-Term Incentive Award Plan of the Corporation ("1992 Award Plan"), incorporated herein by reference to Exhibit 4.3 of the Corporation's Registration Statement on Form S-8 at File No. 33-54960.* 10.6 Form of Nonstatutory Stock Option Agreement under 1992 Award Plan, filed as Exhibit 10.6 to the 1996 Form 10-K.* 10.7 Form of Incentive Share Agreement under 1992 Award Plan (June 1995), as amended November 21, 1996, filed as Exhibit 10.7 to the 1996 Form 10-K.* 10.8 PNC Bank Corp. 1994 Annual Incentive Award Plan, incorporated by reference to Exhibit 10.6 of the Annual Report on Form 10-K for the year ended December 31, 1994 ("1994 Form 10-K").* 10.9 PNC Bank Corp. 1996 Executive Incentive Award Plan, incorporated by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q for the quarter ended September 30, 1996 ("3Q 1996 Form 10-Q").* 10.10 PNC Bank Corp. and Affiliates Deferred Compensation Plan, incorporated by reference to Exhibit 4.2 to the Corporation's Registration Statement on Form S-8 at File No. 333-18069.* 10.11 PNC Bank Corp. Supplemental Incentive Savings Plan, as amended, incorporated by reference to Exhibit 4.1 to the Corporation's Registration Statement on Form S-8 at File No. 333-18069.* 41 10.12 PNC Bank Corp. Supplemental Pension Plan, as amended, filed as Exhibit 10.12 to the 1996 Form 10-K.* 10.13 1992 Director Share Incentive Plan, incorporated herein by reference to Exhibit 10.6 of the Annual Report on Form 10-K for the year ended December 31, 1992.* 10.14 PNC Bank Corp. Directors Retirement Plan, incorporated by reference to Exhibit 10.7 of the 1994 Form 10-K.* 10.15 PNC Bank Corp. Directors Deferred Compensation Plan, incorporated by reference to Exhibit 10.1 of the 3Q 1996 Form 10-Q.* 10.16 Employment Agreement dated as of December 29, 1995, between the Corporation and Garry J. Scheuring, incorporated by reference to Exhibit 10.7 of the 1995 Form 10-K.* 10.17 Form of Change in Control Severance Agreement, filed as Exhibit 10.17 to the 1996 Form 10-K.* 10.18 Amended and Restated Trust Agreement between the Corporation, as Settlor, and NationsBank, N.A., as Trustee, filed as Exhibit 10.18 to the 1996 Form 10-K.* 11 Calculation of Primary and Fully Diluted Earnings Per Share, filed as Exhibit 11 to the 1996 Form 10-K. 12.1 Computation of Ratio of Earnings to Fixed Charges, filed as Exhibit 12.1 to the 1996 Form 10-K. 12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Dividends, filed as Exhibit 12.2 to the 1996 Form 10-K. 13 Excerpts from the Annual Report to Shareholders for the year ended December 31, 1996, filed as Exhibit 13 to the 1996 Form 10-K. Such Annual Report, except for those portions thereof that are expressly incorporated by reference herein, is furnished for information of the SEC only and is not deemed to be "filed" as part of this Form 10-K. 21 Schedule of Certain Subsidiaries of the Corporation, filed as Exhibit 21 to the 1996 Form 10-K. 23.1 Consent of Ernst & Young LLP, independent auditors for the Corporation, filed as Exhibit 23 to the 1996 Form 10-K. 23.2 Consent of Ernst & Young LLP, independent auditors for the PNC Plan and the Midlantic Plan, filed herewith. 24.1 Power of Attorney of certain directors and officers of the Corporation, filed as Exhibit 24.1 to the 1996 Form 10-K. 24.2 Power of Attorney of Robert N. Clay, filed as Exhibit 24.2 to the 1996 Form 10-K. 24.3 Power of Attorney of Jackson H. Randolph, filed as Exhibit 24.3 to the 1996 Form 10-K. 24.4 Power of Attorney of Vincent A. Sarni, filed as Exhibit 24.4 to the 1996 Form 10-K. 27 Financial Data Schedule, filed as Exhibit 27 to the 1996 Form 10-K. ____________________________________________ * Denotes management contract or compensatory plan. 42